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  2004 Tax Information

Federal Taxes for Undergraduate Students - Non Resident Aliens

The Office of General Counsel is providing this information to help you in filing your income tax return due April 15, 2005. We recommend that you use CINTAX to prepare your tax return froms but have made this information available as an alternative.

To Prepare Your Tax Return Yourself You Need To:

   1.   Collect Necessary Tax Forms

You may pick up Federal and New Jersey tax forms at Firestone Library or the Princeton Public Library. You can obtain New Jersey tax information online by going to http://www.state.nj.us/treasury/taxation, and you may obtain Federal forms and information by visiting http://www.irs.gov.
• 1040NR-EZ
• IRS Form 8843
• NJ Form 1040EZ

A Property Tax Rebate may be available to some homeowners and tenants in New Jersey.

You may also wish to go directly to the 2004 IRS Volunteer Quick Reference Guide which can be used to prepare 2004 Federal tax returns for Non-Resident Aliens.

 

   2.   Determine Your Country of Origin's Treaty Status

Many countries have tax treaties with the United States. A tax treaty is an agreement between two governments modifying each country's tax law in order to avoid double taxation. As a non-resident alien student, you must ascertain whether your country of residence has a tax treaty with the United States government since, as explained herein, different reporting and tax rules apply depending upon whether or not your country has such a tax treaty with the U.S.

    3.   Read Instructions and Sample Forms

Once you know your country's treaty status, you can proceed to the specific instructions and set of sample forms relevant to you. These forms provide realistic examples for foreign students at Princeton. Note that you may also be required to file a scholarship statement: For more information, sample forms are available for the following situations:

For both treaty and non-treaty returns, you must attach a separate statement to your Form 1040NR-EZ that shows the amount of your grant, the dates that it covers, the grantor's name (in most cases Princeton University), expenses incurred, conditions under which the grant was given to you and the reason why amounts are exempt from tax. A sample statement can be accessed through this Web site. Sample Form 8843, which must be completed by all non-resident alien students, also may be accessed.

Please Note: These are 2003 forms and instructions. While the dollar amounts may change, the instructions remain the same.

• Non Treaty Country:

  2003 Tax Return (Instructions and Samples)

  2003 Sample Scholarship Statement

• Treaty Country:

  2003 Tax Return (Instructions and Samples)

  2003 Sample Scholarship Statement

• Treaty Country - Canada and Pakistan:

  2003 Tax Return (Instructions and Samples)

  2003 Sample Scholarship Statement

• Treaty Country - India, Barbados, Hungary, Jamaica, and Malta:

  2003 Tax Return (Instructions and Samples)

  2003 Sample Scholarship Statement

General Tax Rules for Graduate Non-Resident Aliens

     · Scholarships & Grants

     · Income for Services (AIs, ARs & Assistant Masters)

     · Filing Requirements

 

Scholarships & Grants

The Internal Revenue Code contains rules which govern the tax status of payments that you receive as a graduate student. First, the Code specifies that if you are a degree candidate and if you do not work for the University, then the amount of any scholarship award which you use to pay for tuition and for books, supplies and fees required for your courses of instruction is not subject to tax. Any grant amount which remains after you deduct these specified expenses is subject to tax and must be reported to the Internal Revenue Service. You should keep in mind that this rule applies to grants that you receive from sources outside the University as well as to any grants that you receive from and through Princeton.

Income for Services (AIs, ARs & Assistant Masters)

A different rule applies to the payments you receive for the work you do for or at the University. Any award or income that you receive as compensation for services rendered is taxable income to you. This is so regardless of how this income is spent and regardless of the connection that the services have with your studies. Therefore, if you are a teaching or research assistant, any income received in return for these services is taxable income. Assistant Master stipends are also taxable. This rule applies even though the research that you do as a research assistant serves as the basis for your dissertation.

Reimbursement for expenses incurred that are directly related to your work as a teaching or research assistant, however, may be a non-taxable reimbursement of a trade or business expense. For example, if your department requires you to travel as part of your AR or AI job and if you incur expenses directly related to your current work while traveling, then any reimbursement received may be considered non-taxable income. Also, your status as a teaching or research assistant does not preclude you from receiving a separate, non-taxable tuition grant. In fact, it is not uncommon for graduate students to receive both a tuition grant and compensation for services rendered.

The amount of any scholarship award which a non-resident alien uses to pay for tuition and for books, supplies and fees required for courses of instruction is not subject to tax whereas any amount received to pay for incidental expenses such as room and board and travel is subject to tax. Individuals who are residents of countries with which the United States has a tax treaty may be able to exclude the full amount of scholarship awards and even a part of amounts earned for work from taxable income.

Loans are not subject to income tax.

Filing Requirements

As a non-resident student you must file a tax return if you have any income subject to tax. Therefore, if you receive payment for services rendered or if you receive a scholarship greater than the amount of tuition you must file a tax return. Virtually all non-resident graduate students should be able to file Form 1040NR-EZ.

Another rule requires that all non-resident alien students file a statement with their tax return regarding their residency status. Completing Form 8843 satisfies this requirement. Form 8843 can be downloaded from the IRS Web site (www.irs.gov). Students are also required to file a scholarship statement. We have provided a sample statement which is linked to this site. If you do not file these statements, the IRS will send your return back to you and may impose penalties.

Please note:  You may pick up New Jersey and federal tax forms at Firestone Library or the Princeton Public Library.  You can obtain New Jersey tax information online by going to http://www.state.nj.us/treasury/taxation, and you may obtain federal forms and information by visiting http://www.irs.gov. 

Non-Treaty Country

By this time you should have received a Form 1042-S from the University's Payroll Office if you received a scholarship for more than tuition.  Please note: if you received a scholarship for the amount of tuition (or less) you will not receive from Payroll a Form 1042-S this year. The amount reported on this form reflects the scholarship income, excluding tuition, received from the University throughout the year. If you are from a non-treaty country, even though you may not owe tax on all of this amount, you must report all of it on your tax return. To report this income, the amount entered on Form 1042-S, Box 2 with an Income Code 15, should be entered on your tax return Form 1040NR-EZ Line 5 ("Scholarship and fellowship grants").

You are permitted to exclude from taxable income the amount you pay for books and fees required for your courses of instruction. You should enter the amount spent on books and fees etc. on Form 1040NR-EZ Line 9 ("Scholarship and fellowship grants excluded").

If you worked at or for the University, you also should have received an IRS Form W-2 reporting the amount of this compensation. This amount is taxable income and should be entered on Form 1040NR-EZ Line 3 ("wages, salaries, tips, etc."). Please note that you need not include on your tax return interest earned on a U.S. bank account.

Treaty Country

If your country of origin does have a treaty with the United States with a provision covering students, the treaty will allow you to exclude a certain amount from your United States taxable income. For students from treaty countries except Canada, Pakistan, India, Hungary, Malta, Barbados, and Jamaica, this amount will be the full amount of the scholarship grant that you received. (See treaty list.)

Many treaties also permit you to exclude a certain amount of income that you received for working at the University. These amounts are listed on the linked treaty list.  If you have signed up for a treaty exemption with payroll, the amount of compensation you may exclude will be listed on Form 1042-S, Box 2 with an Income Code 19 and Exemption Code 04.  You are also entitled to exclude scholarship income which will be listed on Form 1042-S, Box 2 with Income Code 15 and Exemption Code 04.  You should not report these excludable wage and scholarship payments on Form 1040NR-EZ Line 3 (wage) or Line 5 (scholarship) of your tax return.  However, you must be sure to enter these amounts on Form 1040NR-EZ Line 6 (total wages and scholarships exempt by a treaty) and to complete item "J" on page 2 of Form 1040NR-EZ which requests that you supply certain information about amounts excluded under treaty provisions.  Please note: you will receive a Form 1042-S from Payroll if you received a scholarship for more than the amount of tuition and you did not sign up for a treaty.

If you have compensation income that is not excluded from taxable income under your treaty, then you also will have received a Form W-2 from the University. You must enter the amount from your W-2, Box 1 on Form 1040NR-EZ Line 3 of your federal tax form. However, please note, you need not include on your tax return interest earned on a U.S. bank account. The linked sample tax return for a student from a treaty country should assist you in the process of filling out your return.